Orders execution types
Investors and traders often assume that orders are executed instantly when they click "buy or sell" on an online trading platform. However, the process of order execution can involve complexities and time delays. This article explores how orders are executed and the different types of execution methods available.
Most orders sent by brokers are market orders, however, some orders have conditions attached, known as conditional orders. For example, a limit order specifies a price limit above or below which a purchase or sale cannot occur. Brokers are required to provide the best possible execution for each investor.
Instant vs. Market Execution
Instant Execution: This method ensures that orders are executed at the trader’s requested price or not at all. If the price changes during the order placement, the broker will issue a notification (requote) to confirm the new price with the trader.
Market Execution: This method executes orders at the current market price within fractions of a second. The price can vary from what is displayed due to constant market changes. Market Execution is the fastest method and provides full market access, but it carries the risk of price fluctuations during volatile periods.
Buy orders are executed at the ASK price, while sell orders are executed at the BID price. Unlike Instant Execution, Market Execution does not involve requotes, but it can be affected by slippage, where the final execution price differs from the last-traded price.
Investors often avoid using market orders frequently due to the risk of slippage, especially during market volatility. Market orders are typically used when an asset needs to be urgently bought or sold at the current price.
Understanding the nuances of order execution is crucial for investors and traders. While Instant Execution offers price certainty with the potential for requotes, Market Execution provides speed and full market access at the risk of price fluctuations. Choosing the right execution method depends on the trader's needs and market conditions.
Email: info@financebridgepartners.com
Requirements for clients:
By using our services, you confirm that you are at least 18 years old.
Clients should possess a comprehensive understanding of margin trading and the risks associated with trading financial instruments. This includes familiarity with leverage, market volatility, and potential financial loss.
Clients are responsible for ensuring that their trading activities comply with the laws and regulations of their home country. This includes understanding any legal restrictions or requirements related to trading foreign exchange, commodities, or other financial instruments.
Clients must confirm that they are not politically exposed persons (PEPs). A PEP is an individual who holds a prominent public position or has been entrusted with a high-profile role by a government or international organization, including close associates and immediate family members.
Risk Warning:
Trading financial instruments carries a high level of risk and may not be suitable for all investors. The potential exists to lose more than the initial investment. The past performance is not indicative of future results. Trading requires a sound understanding of financial markets, and you should be aware of the potential for significant losses. Only trade with funds you can afford to lose, and consider setting stop-loss and take-profit levels to manage your risk exposure effectively.
© Copyright
